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Patterson-UTI Energy (PTEN)

Participants
James Drickamer VP, IR
Andy Hendricks President, CEO & Director
Andrew Smith EVP & CFO
Ian Macpherson Piper Sandler
Connor Lynagh Morgan Stanley
Keith Mackey RBC Capital Markets
Waqar Syed ATB Capital Markets
Vaibhav Vaishnav Coker & Palmer
Call transcript
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Operator

Good morning. My name is Julianne and I will be your conference operator today. At this time, I’d like to welcome everyone to Patterson-UTI Energy Third Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President Relations. Vice of Drickamer, Investor Mike

You your conference. may begin

James Drickamer

to to which Good The Thank actual to management’s conference you expectations call behalf Executive call XX, for XXXX. statements morning. will ended made financial revise of in could today’s that Andy cause nine are predictions Julianne. and A reconciliations call this financial three undertakes measures press disclosed company now any quick made non-GAAP some that call. issued to the opening prior to Hendricks uncertainties future publicly statements. the and the Officer; Patterson-UTI turn conference call as state Participating welcome on the reminder differ September to Andy our are the in remarks. forward-looking over results filings Hendricks, and in update it’s included beliefs, company’s materially. And the this risks And you, Andy GAAP are website These Chief Smith, months conference obligation Chief plans, company’s results include like pleasure the for Energy, today’s call to and SEC the in to forward-looking no Statements or discuss for or be to this or subject release Financial The conference required intentions, statement. patenergy.com company’s my Andy? Officer. measures. on forward-looking company’s in I’d to statements

Andy Hendricks

third call. and Patterson-UTI’s quarter Good morning, Mike. Thanks conference welcome to

XXXX. this These we we robust the time and contract which for completions and today. us in demand leading We exciting footprint for completed drilling of expand services XX in into Latin position Patterson-UTI an enhance in general can including fleet, XX X, drilling are to industry pleased U.S. the join you drilling acquisition on Pioneer a market, provider Services rigs In is that and rising the of our America. expect rigs October the U.S. our Energy as This added as into our

We’re the Patterson-UTI excited employees about the Pioneer acquisition welcome this to and family.

also officially the that state for rigs is to U.S. I’m the the most tight. in capable Next, excited market

sold we example, and Permian. XK simply are in out PK of For rigs the

As trend leading the of rates. increasing edge rates level to a few have we result, expect and day I a had we’ve seen this years been take It’s up edge month leading continue. move and last over since a this utilization

robust. results be activity to to rigs revenues. quarter, the now in into XX% drilling consolidated and Turning from benefited XX% a pleased total the demand continues for and EBITDA contract adjusted In our third million better higher the pricing XXXX to in with which as quarter increase by I’m very on fourth $XX drilling increased

XK PK For return are example, Of we XX five XX of to have APEX work. the committed rigs class a working. currently in Basin and rigs, the Permian total are already which four to remaining of

meet by their units We Demand power. We demonstrated highline deployed engines, rig-based awarded current remains segment our fuel to customer emissions. a engineering people customers rig of gas emissions. drilling include management EcoCell, that stored for We like in provide power consumption in meritorious thereby reducing control both I’d take and fuel command and to demand. and uses lithium than utility fueled six more electrical power were goals and needed, recently EcoCell, to are strong system. out driven costs natural of hybrid a Permian have currently battery, which segment rigs effectively innovation also both help these technologies strong our our moment when energy to rig energy EcoCell. has capability for award reduce and EcoCell engineering the the the by to the XX% the reducing These for technologies Basin. our sold

We our their proud increase goals of reductions. fleet. the of to emissions are the our achieve I’m size work help EcoCell of production doing capacity to customers are our ramping that we

growth rigs this XX demand in rig seen, we’ve we’ve the With activated year.

rigs restocking While managed been has challenging, well. and our recurring these very it has team

employees has labor past on to overall tight attract cost rig-based have support the U.S. a rig rig increase year, highly the early challenges, The to consumables the market it’s of of supply crews the rig for is impact cost the wages. employees the impact a address industry general to been to our labor of Also approximately skilled oilfield retain costs million. a the inventory very that the indicative increase levels But further to of need labor the For market reactivate and $X.X to initiated has in efficient we with help unusual on reactivate increases this to new in wages increasing. the in September and inflation increase had count. to but also also recovery wage It’s and conditions. to

the With equipment, move improve. for expect cost to and than continue pressure rates to more business higher tightness inflation. to we continues market offset In increasing premium day pumping our

third the to able outstanding were our based achieve quarter, we better During quality. pricing service on

during full reactivated XX% impact than that adjusted pumping also spreads We work second a revenues. of higher were doubled Pressure simul the the of from benefited in level the frac quarter. more core increase EBITDA and two

optimize quarter Tier lower technologies With and for introduced to substitution up third a technology XX%. demand with our to designed During to consistent X first spending, EcoPlus our approach spread, emissions spread, strong we the existing natural is spread dual gas quarter, disciplined we plan spread. In our to capital expect XXth add on fourth XXth to to be we will we the spread. continue first to add which quarter the EcoPlus our trailers pump to fuel. in plan which engines another Late upgrade

motors system impact, our Mercury of activation will spreads strong. for XX drilling and be of the while spread fuel Directional half directional quarter first drilling the In over demand With capable. our Drilling dual measurements in active our remains

the delays and the of receiving activity saw out impact from we’ve the a moment. the we equipment we we year this strong quarter, activity growth sold quarter and quarter. at full order in second of equipment, growth seen are third effectively the With and the During benefited

We common for to fleet to components seems have orders the kits, is our things entire economy, it MW across taking be necessary to but chains expand stretched it motors of the just longer in place for and and be delivered. supply are

further we While for additional focus continue components will activity, waiting pricing. improving to on to increase

leading over call the and all Andy visualization with of analytics use. data drilling that the announcement of completions time real to I would across discuss like analytics across visualize our for a contractors become turn Corva businesses. go has to analyze collaborate Smith, I and Before on all our data to recent they to to the collect, Corva operators provider is and

help solution to power hitting time targets. real Corva P-XX a Corva profitable display with extensive monitor for this our operators leverage further operators the management options, will Corva’s capabilities to such is from more edge expect we that application from with than customers and Plus to and including, CORTEX well wells develop site, while emissions. drill the the to of more We data XXX ability advanced site our well work our plan One allows and lower collaboration our which Utilizing available drilling emissions completions server remotely and page, combining fuel give productive more data cloud-based is and solutions suite key capabilities consumption apps. to

With through third I analytics the that, the the test of businesses. have Andy to they call will the customers. will Smith similar collaborate We in as app the for results data completion soon who and financial incredible view turn a now possible successfully completed use with to be drilling as expect and to were this made over with will share to initial deployable quarter. pleased it We Corva review advanced the potential

Andrew Smith

Thanks, and good Andy morning.

in per the the margin. margin $XX.X day $XX XX% Consolidated $X.XX quarter count contract a third For quarter. drilling net the $X,XXX. rig to our adjusted increased This segments average XX to basis, XX drove increase revenues of drilling, count contract average or share. rig increased Within our loss from second the the in third to EBITDA gross slightly an a in quarter reported improved in On and increase million during we rigs rig million. per total

XXXX. rigs in operating U.S. in drilling day rigs for under during the cost offset by contracts At million. rig a the per average including average U.S. day. average an term under Pioneer, during revenue quarters the and largely September rigs rate had had and ending Based the XX similar per increase increase for an contracts in operating of $XX average we four and quarter contracts from day the of of Patterson in revenue fourth an XX term approximately expect future was September in XX, contracts million currently As Pioneer providing another XX, rigs XXXX, $XXX term place on drilling

day we will to active for XX quarter-over we the rig of growth our another cost which increase count The to rig-based expect be increase rig For Patterson-UTI be increase On expected employees, are labor U.S. by in is the -quarter activity $XXX initiated XXX day. to of by count challenge. fourth robust. rig basis, wage to contribute In XX U.S. expected fourth average quarter. rigs inflation to total average to standalone cost a in the rigs our rigs bringing approximately quarter. our expected count rig per September, the rigs General Pioneer rigs the quarter, a average including oilfield average expected continued for a fourth per to XX our is

of ultimately to recover We higher expect expense rates. from form in customers day the this

count in also larger rising expected during due rig expect fourth both we rig a reactivation the rig in growth rig to reactivations. a of of the the reactivations our support quarter, to Additionally, further cost increase number and expenses

of available activated in count rates to expected we replenish is higher inventory the and various being ancillary rigs to day late some of largely lead addition of rates by reactivations, expect higher where our in expenses On edge also from quarter. leading fourth to rig not and basis, offset rig the to ancillary have a as labor recent day benefit revenue Despite revenue rigs and be day to rig we of lower the cost the growth the In a near strength the in wages as expected parts revenue The equipment. growth of of restock summer the the have per regions per items. the contracted on pass-through for In term, increased. basis, the strong. were look is weaker been many

per on the increase fourth result expect Additionally, negative average in in is quarter we into average our revenue. that to integration day the Pioneer impact revenue a slightly daily of $XX,XXX. our to fleet the rigs has rig Therefore, the the U.S. approximately

per the costs to operating cost labor the increased for this we day we per want $XX,XXX emphasize I fourth expect and quarter to the rig in day. the costs new level the to U.S. see reactivations, as day U.S. With in of not normal. rig average that per did increase

the more increased In simul Our of fourth we’ve million, Pressure costs our the and than EBITDA will quarter during spreads generate revenue costs, when quarter, profit. U.S. pace by approximately costs pumping two better in estimate expect quarter of adjusted the back gross $XX rigs Colombia revenues approximately we the $XXX pumping come from for impact quarter slows. reactivated pressure per pumping quarter include in approximately quarter. third day to of $XXX reactivation the work quarter which of pressure in Internationally, with pricing, million were benefited while should rig the doubled frac $X rig the during reactivation million. fourth out the to that of $XX.X second of XX% the from full second in third Pioneer million more

utilization gross For pumping quarter while increase expecting pressure holidays weather margin expected $XX.X million, increase due despite potential expected the to revenue approximately pumping to to is is the and to fourth approximately $XXX lower delays, to million. pressure

increased million. gross Turning revenues $XX.X third for to now XX% XX% to Directional Drilling, $X.X the increased to profit as quarter million,

includes our businesses a and to increase approximately E&P $X.X in and $XX.X to $XX.X improved a quarter, operations gross of revenues gross rental which with the profit and to quarter. technology our $X.X expect million million. For million million margin other improved fourth Revenues the approximately we third

expect we profit gross quarter similar be third fourth and quarter levels. the to revenues to For both

contribution on Andy, of a completed touch acquisition the this Before call during me briefly the quarter therefore to from back acquisition quarter. X, I and we October Services. on Energy turn the We Pioneer Pioneer full expect let fourth

Pioneer we expenses quarter approximately consolidated begun the basis, going general fourth quarter. as expected fourth the process expect from including we as to We a impairment services expect the the the of $XX million to impact business expense divest $XXX have report to these approximately such production total On are depreciation administrative for Selling, discontinued forward. for and be depletion, operations and amortization and million. segments

tax year share For issued XXX count Pioneer XX%.Including XXXX,we approximately quarter average million we full acquisition, the as expect part shares the of rate to shares. fourth an expect approximately be effective the of the

paying We with in spend our to spending supply of With $XXX back turn December may a for holders CapEx Hendricks. December we cash I’ll all but million over of dividend Also, XXXX. maintaining X, year, on expectation this we with for be not to of quarterly the are that Andy capital per XXXX amount share XXXX. of as $X.XX chain disruptions will the record now XX, call of

Andy Hendricks

Thanks, Andy.

increasing the increase services. and on plans and the discussions both year. exciting the over and very time demand their As based Patterson-UTI for the customers is global at drilling oil I for regarding completions it’s a previously with supply demand also next looking macro given for demand This mentioned, industry our

As and well of a E&Ps reduce number this. are leadership and emissions to achieve looking Patterson-UTI help technologies position has to a

a macro. Let’s start with

rise be down average. for their Demand In being XXX and previously the to XXX it to the offset are projections to around growth. combined for still U.S., rigs This rig our demand oil is will and is while industry they hold some stocks crude have petroleum rigs rigs that by U.S. in may go fully drawn only world not inventories activity sufficient We the production. forecasted stated to increase announced count five-year XXX around OPECplushas XXXX. groups’ demand today to could the show below IA while

and demand that have the could while we rig with So associated turned along activity that. prices goes a oil for

will discipline growth and in these based Patterson-UTI conversations and For drilling return into the public activity fourth cash E&P robust shareholders. to we while this expect activity XXXX quarter growth suggest on capital even continue with in customers, conversations strong and show

are based that However, last weeks of even note we’ve inquiries on in only increases increases interesting activity it’s based had last WTI the on $XX for largely barrel. with it’s to $XX. WTI couple seen over we’ve the rigs the around a these months, trading And few that at

to yet discussions where any regarding increase based on with we’ve $XX. are So we around activity meaningful an today in enter WTI

with we’d both reactivated with meaning increases that be is has and the industry to of efforts that price a emissions all their current especially for XXXX. across the couple we on increases supply we there tightness relative attainable a activity conversations pricing will how to nearly believe over increases, at activate function successes. I And price XXXX. reactivation, also are the see in deck. ‘XX that recent and This now setting our demand are leading much of budgets their of equipment. current by seen see the encouraged completion we the by increases XXXX. like soon pricing having increase for underlying our open With believe equipment the sees be going all to And as forward, edge said, of such technologies we’d availability that, are have improving our cost and Overall, and to the the will All this and by have services. economically higher drilling increasing customers price exhausted. operators reduce growth that driving believe employees these be XXXX increasing Additionally, in the further in public thank can prices last call services commodity budgets is we by in cost E&P $XX hard with to now the price being the into work CapEx no seen we questions. on right if net the will for increases Julianne above macro, and services that versus we Based uptake the forecasted very we we today largely EcoCell like activity to staff higher pricing months. remains while expect margins to all industry, for that due in says Based the otherwise, higher ultimately economics pricing

Operator

our Instructions] go ahead, Sandler. your Please Piper open. line [Operator question from from And first is Macpherson comes Ian

Ian Macpherson

necessarily proclamation have inventory spare the tight. XXXs, QX. plus around in Andy, that for appreciate up in officially that rig like terms are running little bit in industry XXX I order industry available year at next would the if looks increases and morning. at good to But current excluding or Thanks, And reactivate call for outpacing like of not total you I would and what you in another rates you that? day you’re low rate couple bring would in-house what enable in adds would here your out me wanted of we Patterson the of “super-specs” that that what but kind next bridge the to to you economic you’re follow day say opening you that. further even pricing. cost kind It is require I on your Pioneer you’re those dozen Can of a reactivations

Andy Hendricks

Yes, good morning.

at demand right West the seen and we’ve we’re month or edge Permian about in over moving the and PK essentially and Texas when like excited sold and I out now. leading price the XK seeing we’re last really the So And so. upwards, said, rig we’re you about look of market the the also APEX

on the up we’re why at pricing move up. the been get that’s and trying And market so you when has it’s to to look do we what and analysis moving

a wage the on the has people And for put moved the which consumables up rigs. the in on done downturn to So field a increase there’s the drilling been rigs, because rigs. through to back we’ve cost we’ve the big reactivate we’ve

when so in And all so move to that’s and OpEx combine pricing. better day we up, have our you going that get to per

we’re put work. I able very be of us it’s to not to we’re So about leads seeing, pricing what that a to those excited like believe levels that back said, rigs problem to those to get

capable so, out. that back fully market those that the essentially I still are I the about we were in the building And to early U.S., rigs expect talking years say when to out newest what in activity I’m built continue most were kidded is sold consider tight, our we XXXX, increase. the But and in those XXXX rigs rigs

Ian Macpherson

you a but of of in lot said more coming that moved And I than bit. think pricing have you which today’s a reactivations summer has that quite QX, reflective pricing, of

a So if first you’re those day and a between could the towards you of leading melt like rolling-off seems costs normalized XXX first math? we that be half, think exception with going to margins with for the and adjustments QX from $X,XXX reactivation about to QX continue take day, it your in into would bucks $X,XXX up easily edge half

Andy Hendricks

it. in of we No that way kind the falls line look at

rigs edge Of course, XXXX. up, for And going some is but we it a be we’re to leading number move into to go definitely the as of up. large everything takes time operating moving

Ian Macpherson

bit of Can And for there’s implies you I that state steady upside new any can integrate utilization market? Colombia you a that Can until numbers the for squeeze to in see if that Colombia? me guidance tell what one your in and little digest you more? near-term more if those you that

Andy Hendricks

the business them lot that we’re That’s it they’re of and been really a about respected XX and a And us, gives years in operations by part has a upside team for potential of customers. being a running down lot for there, great the Patterson-UTI, Yes well of the excited potential. Colombia.

And oil potential it happen. for where the today’s market makes see into year. put that And growth given the there over we’ll capital we that’ll so, down prices, business But sense. think today’s we next in

that we will U.S. the So near see we be growth potential out But the about size we’re do careful down how it of there. not that calling markets

want signal much don’t information by price to the to too And giving so public we domain.

Ian Macpherson

enough. Andy. Fair Thanks,

Operator

from Lynagh Stanley. from line next your Your Morgan question go open. Connor is Please comes ahead,

Connor Lynagh

things. to competitive wage? with do going wanted offer oilfield hone have thanks. is you do cost offer some raise attract the you Do the other at industries you and is Obviously, items. premium And Basically, again, context for to that Yes, the wage? I’m to with I now. talent? to in continues some curious for labor, the Appreciate on need pressure wages labor of driving in prices been compete when feel you to the the how a And a side all question activity this hard that to time you’re of it improve? on point if under

Andy Hendricks

the look drilling course. went to treated we’ve we’ll the at So reduce drilling how we through and on on wages of rigs, the talk we business didn’t after ‘XX people wages big ‘XX rigs. the when drilling have, for you largest the rigs that’s about and a ‘XX, the the and downturn We

overtime, about is we first And at that increase it’s competitive but so But is look to wage just the when this the we’ve market wages give kept not driving steady. that. the actually you And hourly, been the offer it’s and a when able we’ve the wages and of industries, very warehouses there the or Depot. two-week or whether versus drilling on market competitive very individual construction the in in and competitive Home trucking working increase, other gets hitch rig. very an wage with amount or the are are These when

do very comfortable in us competitive today. we’re very I where field we with to do having now, are, in put not future I anytime them. where foreseeable we’re because the So see raise wages believe the where we at we’re right

Connor Lynagh

justify that? further more substantial much demand the being you to and And how indicate we More of pressure A) it. question. B) need pricing is as your twofold. another reactivations. what to that or question sort needs is, to this have sufficient pricing reactivations wondering do I that the guess it incremental at things. Got of economics deferred of this there’s support the I I’m maintenance upgrades actions do pumping it just Basically of question there? seems would is mean, you side on occur look would the Do Maybe that cost costs to related

Andy Hendricks

lot the this out to the probably cost Yes, that activate ‘XX, as similar activate this time, most that, XXXX,’XX, similar and the we similar easiest and is you it with and $X say to And spreads in $X million you’re as of that early When came range. work peers to effective always us are going spreads, spreads it’s to our million in sector. activating to your a fleet, then those in of you you the early into cost more. you’re overall

activation cost So there’s in cases some on there’s the trailers. also on spreads some the costs, where we’re engines swapping

the so And that on we consider engines And the at cost for technology. consider trailers reactivation swap the job. cost for when to the newer the all looking we and we’re pricing

what’s going think that this at the the going is across spend to we’re having harder and pricing, train we’re challenge. do the the to in also to a as the labor support not the little a price today, drive markets is some that cases, for into And more. think, increases. of going recruit looking cost bit We with just people move board sure all up swaps reactivation, but we in spread to absolutely as doing that is the XXXX get cost just the the is terms that more So across there on industry, engine or But seeing people, along same alone reactivation this where to we’re well. shortages money we’re to the I the I pricing what work the reactivation, and activate think

commodity to that do XXXX, spreads level going in demand more we’re given are see likely have prices So increasing of to trade. where we

not concerned to all that is up. go pricing going I’m So at about

Connor Lynagh

very thanks Alright, much.

Operator

your Your Markets. comes next Capital from Please question ahead, open. is from Keith go Mackey line RBC

Keith Mackey

up questions. you my the simul by in for just and thanks and morning, prepared release in talk about to as frac the Good start I asking taking wanted remarks.

a how run now? a from curious margin doing just much can frac? that you right of maybe of through And frac simul kind accretion standard versus that you the Just job you’re work get

Andy Hendricks

within quarter. it in So and the the we vary Northeast can and Permian the do Basin, simul frac in both

So can frac on a two only and between New or we’re same we where we’re simul or the situation jobs have Northeast one. that on at the Texas Mexico time,

quarter, vary, to to it But hard one of it that that keeps that from the understand within competitive. for you it’d the but difficult give quantify really activate standpoint. a And our that it’s anything us really that reasons it’s give me So pricing helps does be how would And spreads. up. modeling that it’s numbers. But within is you able one me that the more for the help hard understand looks to of some reasons it’s to moving we’re within our you quarter you numbers

Keith Mackey

market attrition do as needed support kind balance further? And that will you there’s pricing And of Understood. you based you And and to consolidation. more natural more about But curious this do supportive of market even see the the pressure you help pumping be attrition of well? or now just much pricing levels or that, expect demand. increasing happening mentioned that just to helps, just on it consolidation be think

Andy Hendricks

not because Pricings any demand for supportive of to have we but that always because the tightness That’s markets we’re to up. the to consolidation the necessary. market, in happen. it’s when going go that’s any for something happy supportive the market of has Look, not with that’s the consolidation we that for more go market the consolidation that’s certainly XXXX, up have going pricing get in to today. we more pricing. in great, of frankly, compete into always If don’t But we see and

Keith Mackey

Thanks it. very much. Got

Operator

ATB Syed is your go Please Capital next from line ahead, Waqar question comes open. Your Markets. from

Waqar Syed

what’s Andy be crews the the horsepower XX you’re will you. that that associated going in QX? Thank with to active have

Andy Hendricks

this question asking me for morning. thanks Waqar Well, that

across on And we’re South this varies. is we’re Given in the and jobs and simul frac Texas. it that Permian, sometimes really sometimes Texas, Northeast not it’s Texas

everything So I’d number. a to that have back to you on with varies. get

Waqar Syed

per just Would average likeXX,XXX on crew, number? a reasonable it like be

Andy Hendricks

the team in of more everything location it’s running or shop And that range minus got that on that be be to over a until would because when jobs. my going is at little or bit you’ve equipment plus not here, looking I’m rotation XX to back maintenance. we’re simul frac

Waqar Syed

in have Fair mentioned could enough. what about of increases the that magnitude you let’s magnitude of take about increases Andy, going first, that forward? then price talk maybe expect you and you increases And drilling, happened

Andy Hendricks

drill out rigs the So, from put And other we where going associated That’s other a equipment, XXs. out the I’m because But that price we low normally are. And of call where total even a equipment a any services, mid number. we XXs. don’t not price provide, in number year drives we we were rig or is in include unless may significant doesn’t a base the that the going drilling, for with call step ancillary summertime. into today up the we’re to pipe, a out that’s might on rig, any ago contract which the that to put

So XXs. really a exciting in now step that up the is that low edge that’s level at leading big and

Waqar Syed

rate spot or Is line a in contracted the has spot and contracted your rate? rate exceeded now

Andy Hendricks

because been roll-off. we Yes, in the and pre-COVID fourth, quarter half. spot the above that signing contracts signed have this and starting even last going agreements we’ve And some are into rate contracted leading a and that edge is the over year to were

moving contracts leading levels a up we that tower have we quickly. but have, in edge of of of variety that is pricing So,

contract and prices. where average So it’s the above

Waqar Syed

increases And then, in the of pumping comments side, price to the increases? especially on price the magnitude any shifting just net-net there

Andy Hendricks

showing cash spent downturn the dollars in EBITDA neutral few excellent on field I’m provided up adjusted has careful CapEx ‘XX, during it’s going moving the about quality paying-off it’s COVID nicely. they’ve great in manage, to of OpEx really the here And being they whether for or then quarters, and of they over out downturn. service been the they’ve and team doing average, held call a job how stayed and out our pumping last a

look doesn’t all say that that we’re putting the pricing, some percentile quality the you double-digit much with out when for new movement push quarter-on-quarter. in the I but so providing upward that combined, mean the at double-digit service suffice to that say percentile, number. of know the to definitely that pleased technology And we’re helps it’s customers it

Waqar Syed

you in compare you your QX, it per crew a around is I be to and one final do from where $X year peers. it when the could if now? like may, But right question, Just which a EBITDA decent think was million number

Andy Hendricks

started to I say ‘XX, what in activity I even XXXX. XXXX, numbers be reflect, up into think we’re we that going early back before slowing would

move, are, So, I to a we of potential see or there of lot of on out see a a upside. lot for think based where commodity oil prices that and room we gas still lot demand natural there’s it’s because whether

Waqar Syed

Appreciate you, Thank answer. Andy. the

Operator

from Your & next open. your go Vaibhav Coker comes is question Please Vaishnav ahead, Palmer. line from

Vaibhav Vaishnav

Good Thank morning, questions. taking my for guys. you

Andy Hendricks

Good morning.

Vaibhav Vaishnav

CapEx think you more us the there way get capacity there pressure have morning. of terms a we to about how can if about, Good them think many Is about sidelines? how fleet, you the should required you in think are then pumping help just And on back?

Andy Hendricks

up I into the mentioned running a got go. a existing And right on you frac have XX frac to X.X in well have and your where go. like move we where total, stack now. million, running order be We XX which you couple just horsepower. a million spreads still we’ll equipment. visibility ways to So, still around we many when you up when redeploy talk today We have work as were OpEx as in horsepower share, and about ago. X.X as years now at the ways look to starts that to we And spreads, CapEx But the earlier are we equipment, to

we So we it’s project-by-project economically and which feasible reactivate. still a inventory. determine all a Well, it’s of think economics, case-by-case we have do inventory, looking if to at all to basis that have equipment matter that just on and the

Vaibhav Vaishnav

it. Got

So fleets to least more that’s at okay, XX helpful. XX, go, have another you

we you actually, a day Is second the increasing, rates we scenario? talk increasing? can Is to half it way talking the half XQ? in more inflation about when about that is there about Going XXXX you are drilling scenario? like think can see it XXXX saw Is just more first margins

Andy Hendricks

It’s the first quarter XXXX scenario.

of this first ‘XX of year. where expect We the in the we of in quarter QX ballpark rebound to were in

Vaibhav Vaishnav

just drill already I about some anecdotally squeeze in are availability higher is hearing if X.X for drill like to may pay can that sold of I E&Ps one pipe out? more was inch it And it. X.X and more, and you inch demand willing talk pipe, Got

Andy Hendricks

own tightened pricing have. it and that using in push short market drill inventory Yes, now in pipes we offshore which of the so we’re allows us X.X X.X, significant historically U.S. to size a we very and up, onshore has an that supply was amount inch the market. That on

the We have X.X at on and are more the to mills suppliers E&Ps order mills and also shift to time. produce we’re hoping up. that the same the casing can keep having for The

see deliveries to we’ll orders get deliveries year our the next for how in that But been just we’ll we’ve go. throughout start So this placing year.

Vaibhav Vaishnav

taking Thank helpful. questions. you for very my That’s

Operator

Instructions]. [Operator

is Macpherson question Sandler. line next from Please open. your from Your ahead, go Piper comes Ian

Ian Macpherson

two close if for a of service Thanks for year-end? activity? well framework I things. Are hoping giving or for see to up. by follow any XXXX, very just a CapEx And a framework was going you ratable for you whether or wanted the numbers also ask much to then divestiture I it’s me just range to have expecting

Andrew Smith

engaged the production are actively for it’s can’t right on don’t within you great falls. this currently. the a sale Yes, that, is it were On number. give that you quarter where Andy a estimate to of services tell But when complete. soon Smith. or after have business. process too quarter I that in will for really We now And we next CapEx, the exactly us working I the

doing give it We’re and that our you call. we’ll throughout budget few next the look months going process quarter to we’re fourth at on the as

Operator

the over queue. in have Andy Hendricks to closing We questions to call further I like would no for turn remarks.

Andy Hendricks

this seeing year. business Thanks, for for happening increases what’s we’re I’ll we’re about Julianne. once into the excited and the demand XXXX and the and in next pricing really business potential, Well, going say again, excited

Patterson-UTI that everything So joined and team all for thanks thanks to those they’re you Thanks. the of the that doing today. call for on us

Operator

call. and your Ladies you disconnect. may you today’s participation, gentlemen, now Thank for concludes this conference